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Boston Area Hospitality Market Report for Q2 2020

 

 

 

Overview

As vaccinations increase and some restrictions are eased, business picked up in Boston in 21Q1, with leisure demand leading the way, but it was still winter. Winter months are normally very slow for the Boston area, and a spike in COVID cases in January didn't help traveler confidence. Nevertheless, the Boston market has improved all key metrics each month so far in 2021, with occupancy gaining ground, and RevPAR steadily climbing its way back. Through April, occupancy was 40.4%, trailing average occupancy for the U.S., which was 57.5%. RevPAR is forecast to increase approximately 120% over 2020, but returning to prepandemic levels of RevPAR is not forecast until 2024 and 2025 and is highly dependent on the full return of groups, business travelers and international tourists.


Boston is set to have a surge of hotel openings in 2021, which is not coming at the most opportune time. There are 14 hotels (2,600 rooms) under construction, with 11 (approximately 2,600 rooms) scheduled to open later this year. The 1,055-room Omni Seaport, scheduled to open in August, accounts for 40% of the rooms opening. One hotel opened already this year, a 146-room Hampton Inn in Watertown. Another anticipated opening happening in mid-May is that of the 286-room Newbury Hotel. Formerly the Taj Boston, and a Ritz-Carlton before Taj, the hotel has been closed since November 2019 and has undergone an extensive renovation. It will continue to be positioned in the Luxury segment. Opening rates are over $500.


Asset sales are already off to a brisk pace with 12 hotels sold through mid-April. Colony Capital, which hit trouble with its hotel portfolio early on in the pandemic, sold the majority of its hotels assets to Highgate Holdings, three of which were in the Boston area. The Residence Inn Foxborough; the Residence Inn Franklin; and a Homewood Suites in Portsmouth, New Hampshire, were part of this portfolio sale. Crow Holdings sold the 418- room Marriott in Burlington to Rockbridge Capital for $69 million ($165,000/key) in mid-March.

Despite a very challenging operating environment, Boston's diversified economy in life sciences, financial services, and tech, combined with top universities and hospitals, as well as excellent sports and tourist attractions, positions the lodging market better than others to recover from COVID in the near and long term.

 

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Information provided by CoStar.com

 

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